The Cincinnati Enquirer has a nice piece about Kroger's Rodney McMullen, who today will be presiding over his first annual meeting of the company as CEO.
Excerpts:
• "Humble to a fault, McMullen's easy-going demeanor belies the critical roles he's played for years before becoming CEO on Jan. 1. He's been intimately involved in the strategy that has grown Kroger's sales every quarter for 10 ½ years – transforming shopping for American consumers who want a viable alternative to Wal-Mart.
"The company, by the way, is kicking its Arkansas-based competitor's ass – something Wall Street has noticed. Kroger's stock hit an all-time high of $50.20 last week even as the rest of the grocery industry appears in peril."
• "In 1988, McMullen played a critical role in Kroger's restructuring – beating off corporate raiders from Wall Street attempting to take over the company in a leveraged buyout.
"CEO Lyle Everingham, president Joe Pichler and CFO Sinkula pushed through a plan for Kroger to borrow more than $4 billion and distribute it to shareholders in a one-time dividend. McMullen crunched the numbers that predicted the future cash flow needed to pay off the debt.
"The result was shareholders got a premium for their stock and Kroger stayed a public company."
• "Toward the end of Pichler's tenure, Kroger's growth began to elude the retailer as nontraditional rivals – drugstores, dollar stores and discounters – discovered they could sell more groceries to drive traffic … McMullen was a key player on the team that figured out how much Kroger could grow sales if it cut prices. Then Kroger would use the additional money to cut prices further, spurring further growth, Pichler said.
"For a time, Wall Street punished the stock because investors were worried the company was pursuing a smaller profit. They were right: Kroger's gross profit margin – the money left after paying for merchandise that's sold to customers but before operating expenses such as labor are paid – has dropped from 27.4 percent in 2002 to just 20.6 percent in 2013.
"But Kroger thrived by taking a smaller slice of a bigger pie, as sales doubled in the ensuing years from $50.1 billion in 2002 to $98.4 billion last year (excluding $4.7 billion at newly acquired Harris Teeter)."
Excerpts:
• "Humble to a fault, McMullen's easy-going demeanor belies the critical roles he's played for years before becoming CEO on Jan. 1. He's been intimately involved in the strategy that has grown Kroger's sales every quarter for 10 ½ years – transforming shopping for American consumers who want a viable alternative to Wal-Mart.
"The company, by the way, is kicking its Arkansas-based competitor's ass – something Wall Street has noticed. Kroger's stock hit an all-time high of $50.20 last week even as the rest of the grocery industry appears in peril."
• "In 1988, McMullen played a critical role in Kroger's restructuring – beating off corporate raiders from Wall Street attempting to take over the company in a leveraged buyout.
"CEO Lyle Everingham, president Joe Pichler and CFO Sinkula pushed through a plan for Kroger to borrow more than $4 billion and distribute it to shareholders in a one-time dividend. McMullen crunched the numbers that predicted the future cash flow needed to pay off the debt.
"The result was shareholders got a premium for their stock and Kroger stayed a public company."
• "Toward the end of Pichler's tenure, Kroger's growth began to elude the retailer as nontraditional rivals – drugstores, dollar stores and discounters – discovered they could sell more groceries to drive traffic … McMullen was a key player on the team that figured out how much Kroger could grow sales if it cut prices. Then Kroger would use the additional money to cut prices further, spurring further growth, Pichler said.
"For a time, Wall Street punished the stock because investors were worried the company was pursuing a smaller profit. They were right: Kroger's gross profit margin – the money left after paying for merchandise that's sold to customers but before operating expenses such as labor are paid – has dropped from 27.4 percent in 2002 to just 20.6 percent in 2013.
"But Kroger thrived by taking a smaller slice of a bigger pie, as sales doubled in the ensuing years from $50.1 billion in 2002 to $98.4 billion last year (excluding $4.7 billion at newly acquired Harris Teeter)."
- KC's View:
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I know this may sound a little weird, but y'know what grabbed me most about this article? (Other than the fact that McMullen seems perfectly suited to Kroger, just as David Dillon was - it appears to be a company where egos don't run wild, and where being low-key and good at your job actually matters for something.)
The thing that I noticed was that the Cincinnati Enquirer ran a story that said Kroger is - and I quote - "kicking its Arkansas-based competitor's ass."
That's just so funny. And completely unexpected.
